AUDUSD Has GDP and Services Data Ahead

AUDUSD could bring some volatility for traders on Tuesday and Wednesday. 

AUDUSD – Daily Chart

AUDUSD – Daily Chart

AUDUSD trades at the 0.6620 level and has support at 0.63 and resistance at 0.69. 

The Australian dollar and US dollar pair have data ahead on Tuesday. US ISM services data will start the day at 11 pm HKT, followed by Australian GDP at 8:30 am on Wednesday. 

While inflation in October dipped to 4.9%, the annual level is still above the RBA’s 2 to 3% goal, with the RBA blaming high immigration for fuelling consumer price pressures.

ANZ CEO Shayne Elliott warned borrowers that interest rates will remain high for years. Cuts are unlikely in 2024 or even 2025, as ‘baked-in’ government spending on defence, renewable energy, and transport infrastructure elevated inflation. 

“You have to stand back and forget next year – just think about the next five years,” he said. 

He added that federal government spending and high immigration levels increased price pressures. 

“Everything Western governments, including Australia, want to do is fundamentally inflationary. Even in the very short term, higher levels of immigration are adding growth pressures to the Australian economy”. 

More than 400,000 migrants moved to Australia in the year to September, and the Reserve Bank is expecting inflation to remain above 3% until late 2025. Mr Elliott said the Australian government would have to surrender big infrastructure projects if they wanted lower interest rates. 

“If we still want to do all those things, something else has to give,” he said. 

Last week, the Reserve Bank of Australia’s new governor, Governor Michele Bullock, told a Hong Kong conference of central bankers that higher immigration levels added to inflationary pressures. 

In the short term, traders will lean on the economic data, believing the US central bank has ended its rate hike cycle. An expectation of one more hike is the belief for Australia’s economy.

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